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It's not just a plan, it's a hope for change plan.

They always work.

Love the blog, Paul. You're far sharper than Peston, who mostly recycles treasury leaks (or at least, that's how it seems). Keep up the good work. And I like the typically generous compliment ("Guido's triumph") --- no rancour here!

Obama has to work within the constraints of what's politically feasible - many of his critics on the left are criticizing him for failing to do things he'd never get through Congress. Some things only become politically feasible after other options are seen to have failed.

Incidentally, I don't think De Long and others would agree with you that Obama's plan as it stands ensures that the tax payer loses out.

Great blog Paul,

How come you've not had a blog make-over like Peston and Flanders?

It's hard to know what all this means. THe blog report is worryingly convincing - although the blog contributions say more about the contributors than about the banks.

Equally, the denial on the basis that they do not have the results of ther stress tests could be weasel-words: and mean only that the final draft has not been approved - pending a rejigging of the results.

This again would be consistent with the link (from the blog) suggesting that the stress tests were not to be discussed intil after an "Earnings conference call" whatever that is. Presumably it is related in some way to the rescent spate of positive results from the banks - which were then undermined by fears of bank indebtedness.

It may also explain why the banks in receipt of TARP money appear not to have increased their lending.

All of which feels like a peep over the edge of the abyss.

'So Obama finds himself potentially trapped in the same way Bush and Paulson were: between a resurgent liberal left wing calling for decisive state intervention and a rightwing plebeian base calling for any bailout to be at the expense of the bankers not the taxpayer: since Bernanke, Geithner and Obama are committed to paying over the odds for the toxic debt, their current plan ensures the taxpayer loses.'

Well the US can deal with its own demons, none of us will make a difference there, however much we discuss it.

But here - we can (and ultimately will, I believe, but very late) have decisive state intervention in the form of unavoidable bank nationalisation.

AND it can be at the expense of bankers not taxpayers, as the bankers and those who have profited are rightly prosecuted and forced to forfeit their ill gotten gains, in order to keep out of jail.

Clawback. Someone has all that cash. And it belongs to the people.

In this way you can please most of the people most of the time.

Wild? These are wild times.

the financial system has been insolvent for at least a year so its no surprise if the banks are technically insolvent. The easing of the mark to market rules should help that.

goes to show a blog no matter how kooky can move markets [listening RP?]. and that if there was a leak there are people ideological enough to do it.

for me there has only been one game in town and that is to buy time. in 3-5 years the cds will expire which will mean 50 trillion [ish] off the books. the mortgage stuff will take longer. ie a mortgage is usually 20 years. so anything that plays for time will do.

i actually think peter mandelson has 'got it' and he is making the right noises as to the way out - ie create wealth in industry with growth potential. yes its the long game but what else is there to do for the next 20 years?

Good Blog Paul

All Politicians today in the West can only play for time.

They forgot that this was in fact World War Three and the BANKERS were not our friends.

Democratic politics is being stress tested and is sadly being found wanting.

The second Phase of this Crisis is yet to hit us globally and could take a few months more yet. I am watching currencies and gold as temperature measures of global economic reality and not markets in equities or gilts.

Paul,

As others have suggested here I think Plan A was to buy some time to figure out what Plan B should be.

The trouble is Plan B is too far outside of the spectrum of current models for the incumbents to ever see it.

Simultaneously they are so afraid of the real situation getting out that they are stiffling debate to in effect 'talk amongst themselves' hence preventing the real solutions from emerging from a wider pool of wisdom. In the meantime the clock is still ticking and the strategies to buy more time are running out and all the media can do is regurgitate and comment on what the incumbent 'experts' are saying.

Where is the moral courage and vision in the world?

I would be happy to tell them what to do, but who listens to a lunatic like me who did not go to Harvard, Oxford or Cambridge and is not part of the establishment and who will tell them that we have to go back to philosophy to unravel this.

This is not about money or the economy actually, at its core it is a failure of philosophy.

See I told you I was nuts.

Jericoa

I HAVE A DREAM TODAY (signed Horatio)

Gold star, Jericoa. But you will be in trouble unless you define 'philosophy'. (:o)

Have you seen and heard wee Jimmie Brown's latest attempt at manipulation? His poor personal weasels must DIE, his efforts are so dire. Someone has taught him to 'smile with his eyes' but he still has no idea WHEN a human being smiles! As for the one about all the MPs he knows wanting to obey the rules, but failing because they don't understand them; I just howled with laughter. If that performance changed even one sub-prime mind in this country, we are doomed. Brown has now proved himself equal to Dubya Bush as a consummate wally.

We need a philosopher.

I HAVE JUST WATCHED THE PURPORTED LEADER OF GREAT BRITAIN ON YOU TUBE.

He performed like a mixture of Gollum, Bluebottle, Frank Spencer and Jaques Tati - and STILL I fail to exaggerate!
Did he clear that video for public view? What will the damned foreigners think when they see him going right of the scale of banality, idiocy and lunacy - time and time again? Yet apart from a swipe at the smile, the Newsnight cohort were discussing the CONTENT rather than the performance!

That video leaves no doubt that James G Brown is weird, and he is desperate. When the captain is overtly bonkers, isn't it usual for the crew to have a mutiny?

Perhaps that video was made by the two tailors who tricked the Emperor? Perhaps poor Jimmie Brown has been duped into stripping himself bare, on You Tube, and exposing his inadequacy, believing he is magnificent?

Every time we change the leader in this country, I end up (almost) wanting the last one back! What does that say about the typical attributes of our leaders?

The famous blog 'leak' of the stress tests seems to have been copied from Martin Weiss's site (moneyandmarkets.com) so it's unlikely to be reliable and we can probably accept the official denial.

That's not to say that there's no underlying truth - Weiss might well be close to the truth and the stress tests have elsewhere been criticised for their inadequacy, not least by William Buiter over at the FT.

It's worth Googling "William K. Black" to check out his views on the current stress tests. He was one of the guys who helped sort out the mess from the previous Savings and Loans scandal in the States of the 80's and 90's. Black argues the stress tests are a waste of time because the Liar Loan Mortgages have no useful data attached to them by definition. The LL Mortgages were sliced and diced to create counterfeit financial instruments. You can take a view on likely default rates but in a downward spiral that's somewhat tricky. You can suspend "mark to market" but that's tricky too. What do you have left to inspire confidence but temporary nationalization ? Any neo-liberal out there got a better idea outside of letting everything collapse?

Jericoa is right though you have to go back to the philosophy of the 17th and 18th centuries to see that the ideas on Democracy were weak on economic rights and lead to the "economic royalism" that created the current financial crisis.

By the time it gets to plan F it will be obvious that the gravy train will be coming of the rails ,even with the extra track provided by tarp to the topdog[s]



Staring sir Fred Pengwyn in the wrong trouserrs